Poor return to policyholder

A friend told me about the business model operated successfully by a life insurance company in Singapore.

1. They paid high commission to the insurance agent. They organise sales contests and provide attractive prizes such as overseas trips and motivational activities.

2. The high marketing cost are added to the product. They use high projection to make the product look attractive to the consumer. These projections are "not guaranteed".

3. Their agents are well trained to highlight the marketing points of the products. They are trained to brush aside the negative aspects, under the technique called "overcome objections".

4. After the customer buys the product, they are locked into it for 20 to 30 years. They have incurred the upfront cost and can only get out by suffering a large loss. The policyholder get a poor return.

5. This company has successfuly applied the same marketing model and made a lot of profit in several Asian countries.